(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

(If "Yes" is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b): 82-__________. )

N/A

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China Petroleum & Chemical Corporation

The First Quarterly Report for 2018

26 April 2018

Beijing, China

1	Important notice

 

2 Basic information of Sinopec Corp.

2.1 Principal financial data and indicators

2.1.1 Principal financial data and indicators prepared in accordance with China Accounting Standards for Business Enterprises (ASBE)

Units: RMB million

2.1.2 Principal financial data and indicators prepared in accordance with International Financial Reporting standards (IFRS)

Units: RMB million

2.2	Total number of shareholders and top ten shareholders at the end of the reporting period

Note 1

Sinopec Century Bright Capital Investment Limited, overseas wholly-owned subsidiary of China Petrochemical Corporation, holds 553,150,000 H shares, which is included in the total number of the shares held by HKSCC (Nominees) Limited.

2.3	Review of operating results

In the first quarter of 2018, the global economy recovered gradually, and Chinese economy maintained a momentum of steady and sound growth with gross domestic product (GDP) up by 6.8%. International crude oil price fluctuated at a narrow range and increased slightly. Domestic oil products market, with ample supply, witnessed fierce competition. According to statistics, apparent consumption of domestic refined oil products was up by 6.2%, among which, gasoline and kerosene demand was still strong. Domestic demand for chemicals kept growing with consumption of ethylene equivalent up by 3.3%.

We pursued supply-side structural reform as our main task, focused on improving the quality and efficiency of our operations, upheld the policy of Reform, Management, Innovation and Development, and strengthened efforts on cost reduction, market expansion, structural adjustment, reform promotion, management reinforcement, which helped deliver solid operating results.

In accordance with ASBE, net profit attributable to equity shareholders of the Company was RMB 18.770 billion in the first quarter, up by 12.8% over the same period last year. In accordance with IFRS, net profit attributable to equity shareholders of the Company was RMB 19.306 billion, up by 12.3% compared with the same period of last year.

Exploration and Production: The Company constantly strengthened measures on high-efficiency exploration activities and adopted profit-oriented approaches on development. In exploration, we made new progress in northeast Sichuan area in Sichuan Basin and in Shunbei area in Xinjiang Tarim Basin, strengthened efforts in E&P in deep, normal pressure and new strata of shale gas formations, and found new discoveries in Weirong shale gas field. In oil and gas development, we accelerated crude oil reserve evaluation, promoted capacity building in new areas of crude oil and natural gas; constantly advanced progressive exploration and reservoir appraisal of natural gas. In the first quarter, the oil and gas production of the Company was 111.33 million barrels of oil equivalent, among which domestic crude oil increased by 1.3% while natural gas increased by 0.6%, compared with the same period of last year. Exploration and Production Segment had an operating loss of RMB 0.318 billion, realising a significant reduction in loss by RMB 5.446 billion compared with the same period of last year.

Note 1  Conversion: for domestic production of crude oil, 1 tonne = 7.10 barrels; for overseas production of crude oil, 1 tonne=7.21 barrels; for production of natural gas, 1 cubic meter = 35.31 cubic feet.

Refining: The Company comprehensively optimised the operation of production plans. We proactively adjusted product structure, improved production volume of gasoline, jet-fuel and other high value-added products, the ratio of diesel to gasoline decreased to 1.06. At the same time, we actively implemented refined oil product quality upgrading to ensure the supply of high quality

refined oil products, optimised crude oil procurement and resource distribution to realise cost control. In the first quarter, refinery throughput grew by 2.1% and refined oil products production grew by 2.6%, among which gasoline up by 4.7%, kerosene up by 8.6% and diesel down by 1.7% over the same period of last year. Refining Segment realised an operating profit of RMB 19.007 billion.

Note 2  Including 100% production of domestic joint ventures.

Marketing and Distribution: Faced with intensified competition, the Company took an active part in coping with marketing challenges. We gave full play of our advantages in integrated operation and marketing network by coordinating internal and external resources, optimising resource distribution, and improving capability of service, and realised increase in both total domestic sales and retail volume of refined oil products. We optimised the distribution network, improved environment protection measures for our service stations, and revamped the storage and transportation facilities of refined oil products to improve the marketing network. We further promoted integration of fuel business and non-fuel business, optimised the system for self-owned brand products and accelerated the construction of integrated service stations. Our non-fuel business kept increasing rapidly. In the first quarter, total sales volume of refined oil products was 47.21 million tonnes, among which domestic sales volume recorded 43.35 million tonnes with an increase of 3.4% over the same period of last year. The operating revenues of non-fuel business reached RMB 8.726 billion, up by 21.8% compared with the same period of last year. The Marketing and Distribution Segment realised an operating profit of RMB 8.925 billion.

Note 3  The number of service stations in 2017 was the number as of 31 December 2017.

Note 4  Throughput per station was annualised.

Chemicals: The Company further optimised product slate, produced customer-oriented and high value-added products. We optimised feedstock mix to reduce cost. We intensified efforts on R&D, production and promotion of high-value-added new products, with the differential ratio of synthetic fiber reaching 89.8% and the ratio of new synthetic resin products and performance compound reaching 63.0%. We put more effort into marketing development and promoted fine chemical products marketing and targeted marketing service. In the first quarter, ethylene production reached 2.995 million tonnes, up by 1.8% and chemical sales volume was 20.458 million tonnes, up by 10.0% over the same period of last year. The Chemicals Segment realised an operating profit of RMB 8.452 billion.

Chemicals5	Unit	For three-month period ended 31 March		Changes (%)
		2018	2017
Ethylene	thousand tonnes	2,995	2,941	1.8
Synthetic resin	thousand tonnes	4,117	4,074	1.1
Synthetic rubber	thousand tonnes	199	227	(12.3)
Monomers and polymers for synthetic fiber	thousand tonnes	2,246	2,424	(7.3)
Synthetic fiber	thousand tonnes	296	308	(3.9)

Capital expenditure: In the first quarter, the total capital expenditure was RMB 6.414 billion. Capital expenditures for Exploration and Production Segment were RMB 1.597 billion, mainly for capacity construction of shale gas, Hangjinqi natural gas and Shunbei crude oil, as well as for construction of Wen 23 Gas Storage Project, phaseⅡpressure boosting project of Sichuan-to-East China Pipeline, phaseⅠproject of Xinqi Pipeline and overseas oil and gas projects. Capital expenditures for Refining Segment were RMB 1.269 billion, mainly for Zhongke integrated refining and chemical project, structure adjustment in Zhenhai, Maoming and Tianjin subsidiaries, and GB VI standard gasoline and diesel quality upgrading. Capital expenditures for Marketing and Distribution Segment were RMB 2.273 billion, mainly for revamping service stations, construction for pipelines from Zhanjiang to Beihai and Jingmen to Xiangyang etc., as well as building depots and storage and rectifying safety and environmental hazards. Capital expenditures for Chemicals Segment were RMB 1.158 billion, mainly for Zhongke integrated refining and chemical project, the high-efficiency and environmental- friendly aromatics project (phaseⅡ) in Hainan refinery, and other resources integrated utilisation projects as well as product structure adjustment projects. Capital expenditures for Corporate and Others were RMB 117 million, mainly for R&D facilities and information technology application projects.

3	Significant events

3.1	Significant changes in major items contained in the consolidated financial statements prepared in accordance with ASBE and the reasons for such changes.

3.2 The impact of the revised financial instruments accounting standards by the Ministry of Finance (MOF) and IFRS No.9 on financial statements

In 2017, MOF amended ASBE No.22 – Financial Instruments: Recognition and Measurement, ASBE No.23 – Transfer of Financial Instruments, ASBE No.24 – Hedging, ASBE No.37 – Presentation of Financial Instruments. Enterprises listed in both domestic and overseas capital markets and enterprises listed overseas adopting IFRS or ASBE, shall apply the above mentioned standards from January 1, 2018. This requirement is consistent with the effective date of “IFRS 9 - Financial Instruments” to avoid discrepancies in the financial statements prepared under ASBE and IFRS. Company adjusted the relevant financial data from 1 January 2018 in accordance with the above standards.

3.3 This quarterly results announcement is published in both Chinese and English languages. In the event of any inconsistency between the two versions, the Chinese version shall prevail.

4. Appendix

4.1    Quarterly financial statements prepared under China Accounting Standards for Business Enterprises (“ASBE”)

Consolidated Balance Sheet

as at 31 March 2018

 Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Balance Sheet

as at 31 March 2018

Prepared by: China Petroleum & Chemical Corporation   

Units: million   Currency: RMB   Type: unaudited

Consolidated Income Statement

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Income Statement

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Consolidated Cash Flow Statement

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Cash Flow Statement

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Segment Reporting

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

 

4.2 Quarterly financial statements prepared under International Financial Reporting

Standards (“IFRS”)

Consolidated Income Statement

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Items	Three-month periods ended 31 March 2018	Three-month periods ended 31 March 2017
Turnover and other operating revenues
Turnover	605,263	567,884
Other operating revenues	15,988	14,301
Subtotal	621,251	582,185
Operating expenses
Purchased crude oil, products and operating supplies and expenses	(474,389)	(438,807)
Selling, general and administrative expenses	(16,708)	(14,614)
Depreciation, depletion and amortization	(25,111)	(27,256)
Exploration expenses, including dry holes	(2,230)	(2,276)
Personnel expenses	(16,861)	(15,431)
Taxes other than income tax	(57,719)	(58,169)
Other operating income/(expense), net	985	(197)
Total operating expenses	(592,033)	(556,750)
Operating profit	29,218	25,435
Finance costs
Interest expense	(1,989)	(2,084)
Interest income	1,288	1,163
Foreign currency exchange income, net	246	94
Net finance costs	(455)	(827)
Investment income	217	52
Share of profits less losses from associates and joint ventures	3,140	3,892
Profit before taxation	32,120	28,552
Tax expense	(6,993)	(6,297)
Profit for the period	25,127	22,255
Attributable to：
Owners of the Company	19,306	17,199
Non-controlling interests	5,821	5,056
Profit for the period	25,127	22,255
Earnings per share
Basic earnings per share (RMB)	0.159	0.142
Diluted earnings per share (RMB)	0.159	0.142

Consolidated Statement of Comprehensive Income

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Consolidated Balance Sheet

as at 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Items	At 31 March 2018	At 31 December 2017
Non-current assets：
Property, plant and equipment, net	634,081	650,774
Construction in progress	115,816	118,645
Goodwill	8,598	8,634
Interest in associates	80,976	79,726
Interest in joint ventures	52,991	51,361
Financial assets at fair value through other comprehensive income	1,155	-
Available-for-sale financial assets	-	1,676
Deferred tax assets	16,892	15,131
Lease prepayments	58,368	58,526
Long-term prepayments and other non-current  assets	82,420	81,982
Total non-current assets	1,051,297	1,066,455
Current assets:
Cash and cash equivalents	129,788	113,218
Time deposits with financial institutions	43,852	51,786
Financial assets at fair value through profit and loss	39,167	51,196
Trade accounts receivable	58,973	68,494
Bills receivable	14,466	16,207
Inventories	191,323	186,693
Prepaid expenses and other current assets	43,661	41,455
Total current assets	521,230	529,049
Current liabilities：
Short-term debts	58,679	55,338
Loans from Sinopec Group Company and fellow subsidiaries	25,834	25,311
Trade accounts payable	177,944	200,073
Bills payable	7,398	6,462
Accrued expenses and other payables	247,032	279,247
Income tax payable	12,866	13,015
Total current liabilities	529,753	579,446
Net current liabilities	(8,523)	(50,397)
Total assets less current liabilities	1,042,774	1,016,058
Non-current liabilities：
Long-term debts	59,348	55,804
Loans from Sinopec Group Company and fellow subsidiaries	43,320	43,320

Deferred tax liabilities	6,322	6,466
Provisions	40,295	39,958
Other non-current liabilities	17,339	17,620
Total non-current liabilities	166,624	163,168
Total net assets	876,150	852,890
Equity：
Share capital	121,071	121,071
Reserves	623,617	605,049
Total equity attributable to owners of the Company	744,688	726,120
Non-controlling interests	131,462	126,770
Total equity	876,150	852,890

 

Consolidated Statement of Cash Flows

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Items	Three-month periods ended 31 March 2018	Three-month periods ended 31 March 2017
Net cash generated from operating activities(a)	12,052	13,276
Investing activities
Capital expenditure	(17,294)	(14,278)
Exploratory wells expenditure	(607)	(906)
Purchase of investments, investments in associates and investments in joint ventures	(2,241)	(1,668)
Payment for acquisition of subsidiary, net of cash acquired	(3,188)	-
Proceeds from disposal of investments and investments in associates, net	13,342	357
Proceeds from disposal of property, plant, equipment and other non-current assets	-	106
Increase in time deposits with maturities over three months	(13,445)	(6,857)
Decrease in time deposits with maturities over three months	21,379	790
Interest received	(108)	597
Investment and dividend income received	674	285
Net cash used in investing activities	(1,488)	(21,574)
Financing activities
Proceeds from bank and other loans	126,432	139,881
Repayments of bank and other loans	(118,865)	(144,028)
Distributions by subsidiaries to non-controlling interests	(390)	(268)
Contributions to subsidiaries from non-controlling interests	70	42
Interest paid	(783)	(758)
Finance lease payment	(3)	-
Net cash used in financing activities	6,461	(5,131)
Net increase/(decrease) in cash and cash equivalents	17,025	(13,429)
Cash and cash equivalents at 1 January	113,218	124,468
Effect of foreign currency exchange rate changes	(455)	(55)
Cash and cash equivalents at 31 March	129,788	110,984

Note to consolidated statement of Cash Flows

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

（a）Reconciliation of profit before taxation to net cash generated from operating activities

Items	Three-month periods ended 31 March 2018	Three-month periods ended 31 March 2017
Operating activities
Profit before taxation	32,120	28,552
Adjustments for:
Depreciation, depletion and amortization	26,336	27,256
Dry hole costs written off	1,974	2,085
Share of profits from associates and joint ventures	(3,140)	(3,892)
Investment income	(217)	(52)
Interest income	(1,288)	(1,163)
Interest expense	1,989	2,084
(Gain)/loss on foreign currency exchange rate changes and derivative financial instruments	(604)	414
Loss on disposal of property, plant, equipment and other non-current assets, net	-	16
Impairment losses on assets	(13)	303
Operating profit before change of operating capital	57,157	55,603
Accounts receivable and other current assets	7,815	(5,336)
Increase of inventories	(4,630)	(3,423)
Accounts payable and other current liabilities	(39,182)	(30,717)
Subtotal	21,160	16,127
Income tax paid	(9,108)	(2,851)
Net cash generated from operating activities	12,052	13,276

 

Segment Reporting

for the three-month periods ended 31 March 2018

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Information of the company and its subsidiaries (the “Group”) reportable segments is as follows:

 

Other than the differences in the classifications of certain financial statements captions and the accounting for the items described below, there are no material differences between the Group’s consolidated financial statements prepared in accordance with the accounting policies complying with ASBE and IFRS. The reconciliation presented below is included as supplemental information, is not required as part of the basic financial statements and does not include differences related to classification, presentation or disclosures. Such information has not been subject to independent audit or review. The major differences are:

(i) Government Grants

Under ASBE, grants from the government are credited to capital reserve if required by relevant governmental regulations. Under IFRS, government grants relating to the purchase of fixed assets are recognized as deferred income and are transferred to the income statement over the useful life of these assets.

(ii) Safety Production Fund

Under ASBE, safety production fund should be recognized in profit or loss with a corresponding increase in reserve according to PRC regulations. Such reserve is reduced for expenses incurred for safety production purposes or, when safety production related fixed assets are purchased, is reduced by the purchased cost with a corresponding increase in the accumulated depreciation. Such fixed assets are not depreciated thereafter. Under IFRS, payments are expensed as incurred, or capitalised as fixed assets and depreciated according to applicable depreciation methods.

Effects of major differences between the net profit under ASBE and the profit for the period under IFRS are analysed as follows:

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited

Effects of major differences between the shareholders’ equity under ASBE and the total equity under IFRS are analysed as follows:

Units: million   Currency: RMB   Type: unaudited

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